Based on pages 3-6 of Developing a leadership strategy: journal article, what does the author mean when he implies that the future of strategy is leadership? How well does this view align with the need for leadership in today’s business environment? Give reasons for your answer.
On pages 6-7 of Developing a leadership strategy: journal article, the author identifies six strategic leadership tasks. How useful is his framework in defining the kinds of leadership required by modern companies? Give reasons for your answer.
The author of Developing a leadership strategy:journal article (pgs. 23-25) has a very specific view of Talent Sustainability. To what extent do you agree with this view? Give reasons for your answer.
To prepare for this essay:
Read the Required Learning Resources that are attached:Developing a leadership strategy:
The following conditions must meet in the essay:
1) I want a typical and a quality answer which should have about 830 words.
2) The answer must raise appropriate critical questions.
3) The answer must include examples from experience or the web with references from relevant examples from real companies.
4) Do include all your references, as per the Harvard Referencing System,
5) Please don’t use Wikipedia web site.
6) I need examples from peer reviewed articles or research.
Appreciate each single moment you spend in writing my paper
Best regards
SAMPLE ANSWER
Leadership strategy
Leadership is critical in an organization. A visionary leadership contributes to the success of an organization. Many studies have been carried out in the field of leadership in quest to identify various ways that leaders can improve in their leadership style. The author deliberates on various aspects relating to leadership.
Implication of the statement by the author of the journal, ‘Developing a leadership strategy: A critical ingredient for organizational success, ‘the future of strategy is leadership’ has various meaning. Strategy is the means or the techniques that a leader will use to provide effective leadership. Strategy can be a roadmap a leader will require to adopt to achieve the set goals (Pasmore 2014). Therefore, for this strategy to have a future, it requires as leader that has the right or the best leadership skills to ensure that the strategy is adopted well (Johnstal 2013). There can be awesome strategies that an organization may have developed but these strategies cannot be useful to that organization if the leadership has no will of adopting them and putting them into correct use. It is the leadership strategy that provides guidelines on the leaders the organization wants, their characters, where they can be found, the skills of the leaders required and their behaviours to provide leadership to ensure that the organization collectively achieves total success.
Therefore, this view aligns with the need for leadership in today’s business environment. Many business leaders have good strategies that they want to adopt to achieve success in their business. However, they do not understand the requirements they need to embrace to be able to achieve these goals (Johnstal 2013). Because of this they end up failing therefore, it is high time that business leadership considered the qualities and attributes that are required to enable them achieve their goals through their strategies. What they need to do is to reflect about the ingredient required for them to achieve their goals. For example, a leader should understand leadership style they use such as participative, control-oriented or laissez faire to know how they can achieve their goal.
In the journal article, the author has identified six strategic leadership tasks that leaders should consider. This framework is useful in many ways when it comes to defining the kinds of leadership required by modern companies today (Pasmore 2014). The framework acknowledges the need to have a review of the business strategy for the business to be in a position to understand whether there is need to make changes in the leadership to ensure that the business operates successful. This is very important for the leaders of today because, it ensures that they have appropriate competencies to provide appropriate leadership in the business. For instance, an organization that has experienced negative publicity as a result of corruption, when receiving a new manager, it is important to review the business strategy to adopt a good leadership styles that will ensure that the level of confidence of customers is regained to bring the business into its normal position. Analyzing leadership capabilities requirement for current and future is important as this enable the company to prepare well and ensure that the leadership have the capabilities to spearhead the organization forward (Marx 2013). Organizations as well keep on changing as time pass and it is important that leaders take part in initiatives that will enable them grow and develop to accommodate the ever changes. Changes such as technology advancement, competition and economic turmoil must be well addressed by a leader and this requires leadership development. Leaders have strengths, weaknesses, and benching these strengths enable them perform well. Furthermore, the framework as well helps leaders to evaluate the culture in which they are operating and as well nurture talents of the leaders and the upcoming leaders in the organization.
In the journal, the author has specific view of talent sustainability. I do agree with the arguments the author raise about talent sustainability. First, talent sustainability requires commitment on the part of a leader. Talents require hard work and determination to be able to sustain the same (Mazzarol, Clark & Reboud 2014). A leader therefore is expected to engage in many activities to sustain their talent such as engage with others, pursue more education, participate in various initiatives, and attend seminars on leadership and many others that enable the leader to remain effective. It is also very important for the leader to carry out an overview of individual capability (Pasmore 2014). Investing on ones experience and building personal, networks, and preparing of developing relationship readiness are some of the things that will enable the leader to sustain their talent.
Leadership is therefore very important for success of any entity. Developing a leadership strategy is critical for a leader but for this strategy to be of value the leaders must show commitment. The leader has a responsibility of ensuring that they carry out an evaluation also self-assessment to prepare themselves well. Talents sustainability is also very important initiatives and leaders must be committed to sustaining the talents or else they fade away. Being a good communicator require continuous practice and access to the right information. Therefore, one must be committed and determined to work hard to ensure that they does not fail on the way or lose their talents.
Marx, T 2013, ‘Teaching Leadership and Strategy’, Business Education Innovation Journal, Vol. 5 no. 2, pp. 12-19.
Mazzarol, T, Clark, D, & Reboud, S 2014, ‘Strategy in action: Case studies of strategy, planning and innovation in Australian SMEs’, Small Enterprise Research, Vol. 21 no.1, pp. 54-71.
Now that you have given some initial critical thought to the notion of aligning HRM with business strategy. Be sure to discuss ways in which your experiences and differing perspectives can help you understand what you have read and, in turn, how your readings can help you expand your thinking about strategic HRM within an organisation.
Exploring similarities and differences in your perspectives on the potential for alignment between business strategy and HRM practices
Sharing alternative perspectives on the notion of ‘best practice’ vs. ‘best fit’ as a means to alignment
Deepening your understanding of what it means to take a critical stance on management practice, particularly strategic HRM
Asking insightful questions about the experiences of your colleagues and about their interpretations of ideas from the Learning Resources
Extending the discussion into new but relevant areas
In your essay, bring in examples of how traditional aspects of the HR function, such as recruitment, selection, succession planning, performance management, reward management, talent development, and disciplinary practices, might become better aligned with business strategy, and how this might benefit or present challenges to an organisation.
The following conditions must meet in the essay:
1) I want a typical and a quality answer which should have about 1100 words.
2) The answer must raise appropriate critical questions.
3) The answer must include examples from experience or the web with references from relevant examples from real companies.
4) Do include all your references, as per the Harvard Referencing System,
5) Please don’t use Wikipedia web site.
6) I need examples from peer reviewed articles or researches.
Appreciate each single moment you spend in writing my paper
Best regards
SAMPLE ANSWER
Aligning HRM with business strategy
Introduction
The term strategy refers to the general or specific elements of a business’ plan which have been formulated to ensure it achieves a certain goal in the near or distant future. The employees of an organization play an important role in ensuring that it meets its commercial objectives to the market which demands products as well as to its investors who demand profits and growth. Business strategy therefore has a lot to do with the achievement of these objectives with special attention being given to a specific set of parameters such as monetary value, volumes moved, market share realized among others. The work force of the organization should therefore be appropriately aligned to these goals as this plays a critical role in the achievement of corporate strategy for the business organization. A good understanding of the dynamics that exist between Human Resource Management strategies and the achievement of these objectives (Martin and Fellenz, 2010).
Similarities between Strategic HRM practices
In this exercise, strategic HRM practices that will be analyzed include the manner in which strategic HRM is applied in the processes of recruitment, selection, succession planning and also performance management (Allen et al, 2010). In Strategic HRM the differences and similarities of these activities need to be carefully considered as this knowledge will help in the planning process. These will be briefly illustrated below.
Similarities in the Strategic Human Resource Management Processes
The main similarity that strategic HRM processes have is the fact that almost all of the decisions made are based on a reverse analysis of the objectives whereby a path is drawn from the end result towards the initial action. This is done in with the aim of ensuring that plans being formulated will lead towards a desired result rather than going for an experimental approach. This is very much in line with the strategy component of this process (Armstrong, 2002). If an organization will for instance want to develop a new type of housing for its market they first have to be in possession of a relatively solid idea of all the defining characteristics of these houses such as the materials, the costing and the sizes. Based on this definition, the human resource manager can work backwards by analyzing the number of workers needed, the possible time-frame, the available budget, the skill level required, how to best inform prospective employees about the opportunity and other factors (Baker et al, 2014). After this is done the process of recruitment will take place in such a manner that will attract a caliber of employees whose attributes are aligned to those of this firm.
Another similarity of strategic HRM is the fact that the procedures that are laid out are geared at ensuring the employee is continually progressing in terms of his or her skills and responsibilities in the organization. The degree of progress will obviously vary but it is important to note that there is no single stage where the employee is considered to be stagnant. Following the recruitment phase, the employees begin to go through a series of trainings and probation to find out if they are capable of adding value to the employing organization (Chen et al, 2014). Those who pass the probation are given more responsibilities and during this period it is expected that their skills and output will improve over time. The HRM department also organizes for seminars and trainings that are designed to ensure the employees are aligned with the strategic plan of the organization. Many organizations also offer to sponsor their employees to courses that help in upgrading their skills such as masters programs. There are several motivation strategies that are put in place to ensure the progression of these improvements.
Differences
One key difference in the application of SHRM strategies is the type of focus applied to the human resource of the organization (Torrington et al, 2011). There are two main approaches namely the shotgun approach and the rifle approach and these are used to differentiate between widespread application of strategy and subjective focus of strategy. During the stages of recruitment as well as team building the strategy is applied subjectively across the entire population of prospective workers and employees respectively. This approach is employed when the desired result is a uniform action by the group being targeted. This could be for them to fill out applications for a vacancy or for them to improve their communication for prospective employees and current employees respectively. This takes places at the pace set by the organization.
The rifle approach refers to a scenario where a SHRM strategy is applied to an individual based on attributes he or she has been found to have (Downs and Swailes, 2013). This may be charisma or creativity which is much needed in improving the performance of the marketing department of an organization. The HRM department may sponsor such an individual for a given course that will better define his or her skills. Such a person may also be given more responsibilities and challenges with the aim of preparing them for a given management position. Apprenticeship is a rudimentary form of subjective application of SHRM policies in an organization. The pace of such initiatives is often dependent on the rate at which the target employee is gaining skills. It is often hoped that such an individual will play a leadership role in furthering the strategic plan of an organization (Wei et al, 2014).
Critical Question: Are today’s Human Resource Managers able to distinguish the relevance of these two approaches to strategy?
Best Practices and Best Fit
Best practices are strategies that have been proven to be effective in the achievement of Strategic Human resource Management. They key strength which also makes them attractive is the fact that they are applied by industry leaders whose products are used as benchmarks in the different industries. It is believed that this approach promises benefits for any firm that incorporates them into its day to day operations. The Best fit approach on the other hand advocates for the implementation of HRM policies that have been formulated to correspond with parameters pertaining to a specific organization. This makes it significantly more subjective than the best practices approach.
The key advantage of the best practices approach is the fact that it is a ready-made strategy that can be applied as soon as it is acquired. The main advantage of best fit on the other hand is the fact that it can be easily adjusted to unique aspects of a business strategy.
The main disadvantage of the best practices approach is the fact that it is limited to strategies that are generic within a given industry and offers no real help in product differentiation. The challenge of the best fit method is that it takes a lot of resources to develop and this does not guarantee its working as it may still not function.
Evidence from the field indicates that many HRM professionals employ both of these strategies with best practices being used for generic aspects of management and best fit being applied to the differentiation strategies. Best fit method has a more profound impact in the alignment strategies since they are more flexible.
Critical Question: Is it possible for an organization to rely purely on Best Fit or Best Practice exclusively in its HRM alignment strategy?
References
Allen, D. G., Bryant, P. C., & Vardaman, J. M. (2010). Retaining talent: Replacing misconceptions with evidence-based strategies. The Academy of Management Perspectives, 24(2), 48-64.
Armstrong, M., & Baron, A. (2002). Strategic HRM: The key to improved business performance. CIPD Publishing.
Baker, T. (2014) Attracting and Retaining Talent: Becoming an Employer of Choice. Palgrave Macmillan.
Chen, S., Han, M., & Zheng, Y. (2014). The Talent Training Model Construction and Implementation Strategy of Collaborative Innovation. Education Research Frontier, 4(3).
Downs, Y., & Swailes, S. (2013). A capability approach to organizational talent management. Human Resource Development International, 16(3), 267-281.
Martin, J and Fellenz, M (2010) Organizational Behaviour and Management, 4th ed.
Torrington, D., Hall, L. and Taylor, S. (2011) Human Resources Management. Eighth Edition. Prentice Hall.
As an organisational leader with an interest in or responsibility for HR, knowing your organisation’s strategy is the first step to taking on a more strategic role. To become a true strategic business partner, you need to consider the value of aligning your HR management practices with your organisation’s strategy and weigh the many options for doing so.
This essay will introduce you to ways of thinking about strategic HRM, including some perspectives that call into question ideas that many leaders take as ‘given.’ One of the expectations of an HR professional who has completed an advanced degree is that you will be able to think critically about different ideas and perspectives and make an educated and informed choice, rather than simply accepting commonly-held notions. Use this opportunity to practice this kind of thinking.
To prepare for this essay:
Read the Required Learning Resources that are attached.
Reflect on what you have read about the nature of business strategy, the potential for alignment between HRM practices and business strategy, and the notion of an HR strategy. Consider to what extent you have experienced or observed aspects of these ideas in organisations.
Critically analyse the notion of aligning human resource management policies and practices with business strategy, including the benefits and challenges of different approaches HR leaders can take to achieve this alignment.
What are the advantages and disadvantages of the ‘best practice’ and ‘best fit’ approaches (Armstrong, 2003) as a means of linking business strategy and HRM?
How could using one of these approaches to the selection of HRM practices aid in the creation of an HR strategy for the organisation?
What other aims should HRM have in addition to aligning with business strategy?
What has been your experience in organisations regarding the alignment of HRM and business strategy?
What aspects of concepts presented in your readings have you observed or experienced?
The following conditions must meet in the essay:
1) I want a typical and a quality answer which should have about 830 words.
2) The answer must raise appropriate critical questions.
3) The answer must include examples from experience or the web with references from relevant examples from real companies.
4) Do include all your references, as per the Harvard Referencing System,
5) Please don’t use Wikipedia web site.
6) I need examples from peer reviewed articles or researchs.
Appreciate each single moment you spend in writing my paper
Best regards
SAMPLE ANSWER
Human Resource Management and Business Strategy
Organizations adapt to different business strategy they deem appropriate to enable them achieve their aims and goals. The concept of human resources strategy has as well become very essential in ensuring that businesses achieve their set goals and objectives. The paper deliberates on issues pertaining to business strategy, alignment between HRM practices and business strategy and HR strategy among many other aspects.
Various researchers define strategy differently however, it refers to the scope and direction on an entity over a longer term and must match the available resources to its changing environment, customers, and markets and should meet the expectations of the stakeholders. Strategy therefore provides a direction of a business (Chandan, Sitaram & Bijaya 2011). Business strategy therefore focuses on achieving a competitive advantage in a certain environment. Managers of an organization have the responsibility of developing an appropriate strategy that can propel the organization forward and towards achievement of their goals. A business strategy must be in tandem or be aligned with the Human Resources management practices to meet the set goals and aims. The interest of the employees and the organizations require strategic integration to ensure proper utilization of human resources to achieve the set goals (Dutch 2013). Employer- employees’ relationships should remain strong for the organization to achieve its strategic business objectives. The business strategies as well as human resource practices such as recruitment must be responsive to the changes in business environment coupled with changes in demographics of workforce, increased globalization, increase focus of profitability through technological change, growth, intellectual capital and many other changes organizations experience.
Human resource strategy is as well critical in achieving competitive advantage. Organization is required to use planning to come up with consistent approaches that match HRM policies and activities for business strategy (Katou & Budhwar 2008). Employees must be viewed as strategic resources in achieving competitive advantage of an entity. Therefore, through HR strategy, appropriate modalities are generated to address issues pertaining to staffs to ensure that the entity has the right people that will promote goal achievement and increase productivity.
Many organizations have embraced the ideas of business strategy hence; align their HRM with their business strategies to achieve a competitive advantage. Example of these organizations includes Coca Cola, General Electric and Microsoft among many others. These entities have managed to remain competitive because of their commitment to their employees. They have cultivated positive relationships that have played a critical role in their success.
Aligning human resource management policies and practices with business strategy is a trend many organizations have adopted to enable them achieve their goals and achieve competitive advantage. Managers have a duty to adapt to appropriate strategies to be able to meet the needs of their entities. In recruiting their employees for instance, they need to recruit those capable of delivering high productivity. This integration should achieve strategic fit through vertical and horizontal integration. It contributes to achievement of congruence between the business and human resource strategy and ensures that various elements of HR strategy fit together and support each other mutually. The alignment should as well be complacent with the organizational culture, as this will facilitate their achievement. Human resource strategies should focus on developing employee relations, management of talent, and provision of reward system, continuous improvement, resourcing, and learning and development of employees.
Achievement of these alignments requires HR leaders to adapt to various approaches such as resource based which have various frameworks including, high performance management, high commitment management and high involvement management (Chandan, Sitaram & Bijaya 2011). The advantage of resource-based approach is that it lays more emphasis on human capital. Effective deployment of resources allows an entity to obtain added value as is possible to have a strategic fit between resources and opportunities. Challenges of the model are that it requires heavy investment in people through training and development, motivation among many others (Byars & Rue 2000). Managers can as well adapt to high performance management approach where a number of interrelated processes are developed together to impact on the productivity of an entity. This helps an entity to trigger increased profitability. However, the challenge is that it requires leaders with vision, to create momentum and a sense of direction. Furthermore, the progress requires constant measurement. Another approach is high commitment management model that promote mutual commitment (Chandan, Sitaram & Bijaya, 2011). Employees should self regulate themselves and need not to be controlled by pressures and sanctions but rather relationships need to be built on trust. This model therefore has advantage as it triggers innovation and commitment. The challenges are that, it requires a vision and a consistent leader to trigger the spirit of trust. The last approach is high involved where employees are treated as partners to the enterprise. The advantage is that, employee communication and involvement increases productivity. The challenges are that decision making process is likely to delay.
Best practices relate to the universal success of certain HR practices. Its advantage to aligning business strategy and HRM is that it promotes overall organization productivity while disadvantage is that it may not provide growth indicators at various levels of an entity. On the other hand, best fit focuses on contextual factors. Its advantage is that it allows understanding of performance of a given sector while disadvantage is that it is not appropriate to assess the overall productivity of an organization (Armstrong, 2006).
For instance, selecting high involvement management approach can aid in creation of HR strategy, as it requires that certain issues be adhered. These issues include creation of good climate to promote dialogue between managers and staffs. Modalities to engage are required to help in definition of expectations, to share information about values, missions and objectives of an entity among many other issues. Through this process, it becomes easy to formulate HR strategies to trigger competitive advantage.
Apart from aligning with business strategy, HRM should as well aim at promoting other issues relating to environmental sustainability, corporate social responsibilities and ensure that they promote the welfare of the employees as they pursue growth and productivity (Cooke & Saini 2010).
I have experienced alignment of HRM and business strategy in various organizations I have worked. Most of the organizations have managed to achieve their goals and recorded increased productivity. Employees’ motivation and positive relationships between the managers and employees played a key role in these organizations competitive advantage.
I have therefore experienced various concepts presented in this reading. Concepts such as resources based approaches, competitive advantage, HRM strategies, business strategies are some of the common concepts that I have observed adopted in the various organizations. Organizations are investing more in competent human capital as the source of their competitive advantage.
References list
Armstrong, M 2006, Hand Book of Human Resource Management Practice, Kogan Page limited, Philadelphia.
Byars, L, & Rue, L 2000, Human resource management, Mc. Graw-Hill, Boston.
Chandan, K., Sitaram, D., & Bijaya, K. (2011). Strategic Human Resource Management: Exploring the Key Drivers’, Employment Relations Record, vol. 11 no. 2, pp. 18-34.
HR professionals play a variety of roles within an organisation. Increasingly, these roles are becoming strategic in nature, as HR managers are seen more as leaders and strategic partners with other business leaders. In organisations in which the HR leader’s role is shifting, many leaders and managers may see the value in a more strategic role for HRM; others may be unclear how HRM can add value. In some organisations, the notion of HRM as a strategic partner may still be on the horizon, awaiting an HR leader who possesses the competencies and vision needed to help the organisation move in a new direction. This week’s Key Concept Exercise provides you an opportunity to examine the notion of a strategic role for HRM.
To prepare for this essay:
•Read and consider the notions of the HR leader as a strategic business partner and ‘strategy architect’ (Ulrich & Brockbank, 2009).
•Reflect on the role of the HR leader in the context of changes in the nature of work and work environments.
•Think about an organisation you know well. To what degree does the human resource manager in that organisation serve as a strategic business partner?
The following conditions must meet in the essay:
1) I want a typical and a quality answer which should have about 1100 words.
2) The answer must raise appropriate critical questions.
3) The answer must include examples from experience or the web with references from
relevant examples from real companies.
4) Do include all your references, as per the Harvard Referencing System,
5) Please don’t use Wikipedia web site.
6) I need examples from peer reviewed articles or researches.
Appreciate each single moment you spend in writing my paper
Best regards
SAMPLE ANSWER
The role of the human resource department within an organization has changed from the traditional conception (SHRM 2008, p. 4). In the traditional setting, the human resource department performed staffing the organization, wherein the crucial roles included, sourcing, interviewing, recruiting, and orientation. Whereas staffing equipped the organization with skilled work force to run its day-to-day operations, the present times have made business strategists to rethink the roles of the human resource department (Dave, Wayne & Dani 2009, p.24). Unlike the secondary position the human resource department took in critical decision-making, the department now assumes a central position in strategic management and policy implementation.
Strategic decision-making involves taking concerted steps to avert a future crisis. As concerns the running of a business entity, this process involves making decisions that will make the business more profits. The centrality of the human resource department lies in the implementation of the company policies (Dave Wayne & Dani, 2009, p. 25). People implement the company’s policies and strategic blueprints. Strategic decisions are no longer within the purview of the top echelons in the organization. The top personnel’s roles in the organization are currently mere ratification and assent. Once the human resource department shapes the way forward, the managers serve to ensure the employees observe them.
Owing to the hard economic recession that hit businesses globally, most of them had to restructure in order to stay afloat. The process of restructuring involved, changing the manner and scale of operations, right sizing, and retrenching. Personnel managers had to devise ingenious ways of going through the aforementioned processes without hampering the operations of the business or sending a bad signal to former employees and the public at large. In addition, the very competitive market situation has forced companies to go an extra mile in order to position itself profitably in the market. Liberalization policies have made it possible for new players to have a stake in the market, with old and established entities. This not only minimizes profits but also threatens the very existence of some businesses.
Against this tirade, some companies with a robust and dynamic human resource management have withstood the test of time. This discourse will analyze two companies whose human resource department has steered them to tremendous success. In the telecommunications sector, Apple Incorporated is a fine example of how strategic management yields better fruit (Jeffrey 2005, p.4). Apple Incorporated uses internal management system to plan and execute its functions. The insight approach ensures that only persons conversant with the mission and vision of the company take the reins. Appointments to top managerial positions follow a thorough filter system (Jeffrey 2005, p.7). In addition, the company operates on set targets and reviews its performance appraisals periodically to evaluate the progress of the company so far.
On the non-profit making schemes sector, Digital Opportunity Trust (DOT) is perhaps one of the best-managed organizations. Its human resource department is the busiest, overseeing operations throughout the worldwide branches. The organization uses best human resource business practices, including, ensuring that the human resource department is part of its corporate strategy. In that, employees are highly motivated as they develop a sense of belonging ( Dave, Brockbank & Dani 2009, p.27).
Overly, the human resource department in today’s business world is crucial to the existence of the business itself (SHRM 2008, p.3). Through strategic business management, the department helps the company achieve its overall objectives.
Jeffrey, C., 2005, The Apple Way. McGraw Hill: New York.
Survey for Human Resource Management (SHRM), 2008, HR’s Evolving Role in Organizations and its Impact on Business Strategy. SHRM Research Department: Alexandria.
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Research
Conduct research using a trusted internet resource, or a business magazine or journal to find an article on the topic of a company experiencing legal issues related to workplace discrimination, unfair labor practices, or unethical behavior. This source should also describe the organization’s approach in managing and recovering from the charges brought against them.
•Recovery Strategies
In this unit’s studies, you conducted research on a company experiencing employment-related legal issues. In this discussion, summarize the content of the article you chose and give your opinion regarding whether you feel the company’s approach to managing and recovering from this issue was effective. Be sure to provide a rationale to support your point of view.
Note: A recent company (2013 – 2014)
Key words: Topic on a company experiencing legal issues related to workplace discrimination, unfair labor practices, or unethical behavior. This source should also describe the organization’s approach.
Key words: Summarize the content of the article you chose and give your opinion regarding whether you feel the company’s approach to managing and recovering from this issue was effective. Be sure to provide a rationale to support your point of view.
SAMPLE ANSWER
Walmart Recovery strategies
Wal-Mart, one of the world’s largest companies, has been facing gender discrimination suits for quite a long time. Wal-Mart’s original pregnancy policy provided that pregnant women would only qualify to change their work environment as long as the change did have a negative impact on the business, which would include creation of a job, light duty or temporary alternative duty or reassignment (DePillis, 2014).
In January 2013, a certain group made complaints to Wal-Mart claiming that the policy was in violation of the Americans with Disabilities Act and the 1978 Pregnancy Discrimination Act. The group proposed that Wal-Mart should allow women pregnant women to do easier jobs instead of taking early lives of absence. Wal-Mart responded that its policy is perfectly legal and that it was not going to change it.
Soon after Wal-Mart’s response, a group of women complained to the Equal Employment Opportunity Commission on behalf of Wal-Mart’s pregnant employee whose supervisor refused to relieve her of the burden of climbing ladders with heavy boxes despite having brought a medical note explaining that such work was harmful. A month after the complaint, two company shareholders who also work at Wal-Mart proposed to the Securities and Exchange Commission for the policy to be changed.
In March 2014, Wal-Mart issued a new policy providing that women may be eligible for reasonable accommodation in circumstances where temporary disability caused by pregnancy makes them to require assistance to make an apply for a new job or to carry out essential functions of a job. This theoretically implies that pregnant employees are more likely to be assigned less physically demanding jobs if they experience difficulty carrying out their duties. If the policy is properly implemented, it will help Wal-Mart come good on the manner in which it treats women, and thus achieve a reputation for equal treatment of employees.
Project Risk and Quality Management Strategy, Managing Rick and Quality in the face of change.
Review the St. Dismas Assisted Living Facility Casa study on pages 111 and 112 of the Mental text.
Develop a risk strategy for your project. In addition to listing your, describe your process for identifying, analyzing, and managing your risks. Than prepare a quality management strategy. Your project risk management strategy must be at least one page, double spaced and include:
A brief statement on how you plan to manage quality for your project,
A brief statement on how you plan to manage project change,
A brief description of at least two tools and /or techniques you plan to use to manage quality and why you chose those tools.
Reference: A Guide to project management body of knowledge (PMBOK GUIDE) 4th edition.
APA Styles.
SAMPLE ANSWER
Project Risk and Quality Management Strategy
Projects are vulnerable to certain risks and therefore it become important to ensure that an appropriate strategy is in place to mitigate such risks to ensure that the project comes to its completion within the expected period and meets the objectives set. The author develops a risk strategy for St. Dismas Assisted Living Facility Casa study. The author as well describes the process of identifying, analyzing and managing the risks, and provides a quality Management strategy
St. Dismas Assisted Living Facility Casa study is experiencing a slowly decline of patient admission. This problem puts at risk the capability of the organization to accrue profits. The solution is to expand the facility by including an assisted living facility to ensure delivery of cost effective inpatient care. To ensure that this project is success, it is vital to carry out a risk assessment. The strategies adapted should ensure that the project risks are mitigated.
Risk management is a systematic process where manager identify, analyze and respond to project risks. This process includes maximization of the probability and consequences of positive events and at the same time minimizes any probability of negative or adverse events or consequences. In this project, the risk strategy that will ensure that problem is mitigated will entail the following:
The first thing is to come up with a good plan on overcoming the risks in undertaking the project. In this planning, it will require various inputs such as reviewing the project charter, organization risk management policies (Thamhain, 2013). Roles, responsibilities, and authority for decision-making are going to be defined to ensure that every party understands their roles (Project Management Institute, 2000). It is also important to come up with a template from the organization risk management plan, identify any stakeholders’ risks tolerance and work breakdown structures. At this stage, it will require a meeting to be held to come up with a risk management plan. People that will be in attendant will include, project team, leaders, project manager and any person in the entity with the responsibility to manage the risk planning and execution activities and the stakeholders (Project Management Institute, 2000). Furthermore, at the planning stage, issues pertaining to budgets estimates, time frames and tracking are highlighted and discussed to ensure that once the proves commences it can move son smoothly.
After risk management planning, the second step required is risk identification. This will allow me to determine the specific risks likely to affect the project. The risks will be identified and its characteristics documented. To identify risk, it requires the person in charge to be aware of the mission, scope and objectives of the owners and stakeholders as well as of the project. It is also important to review the output of other processes to identify any risks across the entire project (Liu, Zou & Gong, 2013). Therefore, this will require review of some of the documents such as product description resource planning, WBS, schedules and costs estimates among many others. Categories of risks that are likely to be identified include, technological based risks, project management risks such as poor time and resources allocation and inequality of project plan. Other categories are organizational risks and external risks such as labor issues, legal or regulatory environment issues among many others. Review of historical information such as project files and published information will also help to understand the project and identify any risk that the project may be facing.
Various techniques can be used to gather information about the project including, brainstorming, using Delphi technique, use of SWOT analysis and through interviews.
What follows is the analysis of the project risk. One of the ways to analyze these risks is to carry out a qualitative risks analysis to assess the likelihood and impact of identified risk. Risks are prioritized in accordance to their potentials effects on the objectives of the project (Project Management Institute, 2000). It as well helps to understand importance of addressing specific risks and guides in risk responses. In analysis of these risks, the criteria used is the risk probability and impact in qualitative terms such as high, moderates and low or very low. In case the probability of risks occurring is high, then this provides a warning that triggers adherence to an alternative strategy to mitigate the same. Another way to analyze the risk is quantitative risk analysis that aims to analyze the risks numerically to find out probability of each risk and its consequences occurring on the project objectives (Benţa, Podean & Mircean, 2011). This analysis helps to determine or enhances achievement of a specific project objective. Identification and measurement of risks is done in relation to the relative contribution they have on the project risk.
The next step is risk response planning whereby options are developed to help determine actions that enhance opportunities and reduce threats to the project objectives or aims (Project Management Institute, 2000). This process includes identification as well as assignment of responsibilities to parties or individuals, to take charge of particular agreed risk responses. This process is very critical as it ensures that identifies risks are well addressed. If this process is effective, the chances of decreasing these risks for the projects are high and vice versa. The process should consider the severity of the risk, the time required costs to meet the challenge, be realistic within the context of the project and the parties involved.
Risk management is very important in project risk management strategy. This includes monitoring and control of the risk the project faces. This process keeps track of the identified risks, monitors schedule risks and as well helps in identification of new risks (Project Management Institute, 2000). It as well ensures execution of risk plans and evaluation of effectiveness of these plans to reduce the risk inherent. The project managers will be able to implement a contingency plan to mitigate these risks to allow successful project implementation. Risk monitoring and control is therefore a continuous process from the start to the end of the project. These risks continue to change as projects proceeds while anticipated risk may as well disappear. Through risk monitoring and control, information is provided that allow making of effective decisions before the risk happens. During this process, it is important to ensure free flow of communication (Didraga, Bibu & Brandas, 2012). All stakeholders should assess the risks periodically and assess their magnitude as they come up with amicable decisions or solution to mitigate the risks. Monitoring and control serves many purpose. It ensures that risks responses follows planned plans in implementation, ensure validity of project assumptions, ensure that proper policies and procedures are followed and ensure that appropriate strategy is adhered to implement mitigation plan to counter the risks among many others.
Project quality management
Project quality management is a vital process and entails all processes that aims at ensuring that project satisfies the needs for what it was undertaken. This process entails all activities of the management function that helps in determining the quality policy, responsibilities, objectives that are implemented through quality planning, assurance and control, and improvement within quality system (Project Management Institute, 2000).
In implementing this project, quality management is important and it will involve three major phases. These will include quality planning, quality assurance and quality control. In quality planning, quality standards relevant to the project are going to be identified and a process determined on satisfying them. Quality assurance will entail evaluation of the overall project performance on regular basis to ensure that it satisfies them and meets relevant quality standard set. Quality control entails project monitoring to find out if it indeed compile with the appropriate quality standards as well identifies amicable ways to eliminate cause of unexpected performance. Therefore, this project will be managed by ensuring that it is reviewed on daily basis to comply with the expected threshold. Any deviations will be taken into consideration and corrected to ensure that the expected level of quality is upheld.
Management of project change is also important to ensure that the project succeeds. In this case, project change will be managed through scrutiny of the project to determine any changes. Information on changes will be accessed through interviews, brainstorming and sharing with the project managers and the stakeholders. Communication is also very critical to ensure that in case of changes, they are communicated to the relevant stakeholders to enhance decision-making and to ensure the project moves on smoothly.
Various tools are used in management of quality. In this case, the two tools to use will include, benchmarking and benefits /cost analysis. Benching is appropriate because it provide a standard to measure performance of the project by comparing actual project practices with other projects to provide an overview on the areas requiring improvement. Benefit/cost analysis is selected because it ensures that appropriate strategies are adopted to increase productivity at reduced costs and to increase stakeholder satisfaction. It as well provides an assessment of benefits and cost of project hence appropriate in enhancing decision making.
References
Benţa, D., Podean, I., & Mircean, C. (2011). On Best Practices for Risk Management in Complex Projects. Informatica Economica, 15(2): 142-152.
Report Outline
1. Cover page and Table of Contents – Cover page should include: Title: Strategic Plan, Company Name, Date, Author, Course Name. Table of Contents should include a listing of all of the topics in your strategic plan.
2. Company Description – What is the state of the business today including the company background, products, services, markets serving, key technologies, key manufacturing and operations, financial strength, key partners…etc.
3. Mission and vision statements of Apple company
4. External Audit – Assess the external forces that affect the organization: economic, social, cultural, demographic, environmental, political, governmental, legal, technological and competitive. Use the tools for external audit.
5. Internal Assessment – Assess the interrelationships between departments, marketing, finance/accounting, production/operations, research & development and management information systems. Use the tools for internal assessment (SWOT, Financial ratio analysis, IFE, SWOT strategies, QSPM…..etc)
6. Establish Long Term Objectives. The objectives should provide direction for the organization, be quantifiable, address key external and internal forces and be SMART objectives which are: Specific: The objective tells exactly what, where, and how the problem or need is to be addressed. Measurable: The objective tells exactly how much, how many, and how well the problem/need will be resolved. Action-oriented: The objective uses “activity indicators” to insure that something will be done. As with goal-setting, use action-oriented verbs such as deliver, implement, establish, develop, supply…etc. Realistic: The objective is a result that can be achieved in the time allowed. Time-bound: The objective includes a specific date for it’s achievement.
7. Evaluate and select a strategy or strategies (David, Table 5-4, page 137). Large companies commonly have multiple strategies.
8. Implementation Plan – Develop for the selected strategy or strategies
9. Conclusions and Recommendations
10. References and Appendix
Strategic planning is the process of defining the strategies of a company and how they can be used to promote the attainment of competitive advantages (Erica, 2012). Such planning helps direct the decision making process regarding allocation of resources among other control and management mechanisms. The company in focus is Apple Company Inc. which is a renowned multinational company. In particular, strategy formation at Apple Company could involve setting goals and mobilizing resources and labor towards executing the set goals and objective. The senior management is charged with the role of strategic planning in most organizations. Strategies can be categorized into two; intended strategies and emergent activities. Formulating strategies for Apple Company takes the form of a cohesive and comprehensive analysis that entails synthesizing strategic thinking into planning activities.
1. Company Description
Apple Company is a multinational corporation based in the United States. It’s headquarter is in California. It is specialized in the development, designing, marketing and selling of consumer electronics, online services, personal computers and computer software. The company has managed to create its market niche by producing a dominant hardware which is used in the Mac product line such as iPod media players, iPad table computers and iPhone smartphones. The software used to run the Mac hardware is known as the iOS operating systems and the OS X (David, 2007). The company was founded by three principles; Steve Jobs, Ronald Wayne and Steve Wozniak in the year 1976. The company then became incorporated into Apple Computer, Inc. in 1977 and later renamed to Apple Company Inc. in 2007. The new name reflected the companies shift in focus to produce a diversified line of consumer electronics. Currently, the company ranks as the second largest in the IT industry. This rank comes after Samsung Electronics which has been ranked as the world’s largest mobile phone manufacturer.
Apple sales it products via an online store as well as its chain retail stores. Its other products are sold by direct sales force, resellers, value added resellers and third party wholesalers (David, 2007). These products include Macintosh, iPods, iPhones and other compatible hardware products such as storage devices, printers, watches, branded television sets, headphones, speakers among other computer peripherals and accessories. The online services provided by Apple Company include iTunes Store, iCloud as well as an App Store. Apple also manufacturers digital contents which are sold through iTunes Store. These services include software programs which are sold through the Apple App Store to its diverse groups of consumers. The iCloud online service has been helpful in synchronizing a wide range of data such as contacts, email, documents, calendars and photos. The iCloud also offers backup storage for iOS.
Apple has specialized in segmenting, creating market niches and penetrating market segments. The company has created a blue ocean for its products since, in spite of the high prices, the company has managed to retain its customers who range from small and mid-sized businesses, individual consumers, educational institutions, government agencies, creative customers and enterprises. Apple Company Inc. serves multinational customers through its 425 chains of retail stores which are strategically located in 14 countries. The supply chain is facilitated by other independent sellers. The latest technologies by Apple Company Inc. include the iOS 8 which has more than 4000 APIs that lets developers improve the capabilities and features of applications. The technology enables a deeper integration of iOS thus enabling extended functionality. The technology has facilitated game development. The iCloud for developer’s technology has leveraged the full power of building applications through the cloud kit framework. The developers can now securely and easily store and retrieve essential data on their applications from an online database.
Manufacturing and operations at Apple Inc. are highly innovative thus leading to the production of innovative products which move through the fast product life-cycle associated with the IT industry. The company promotes its products through spectacular promotions and marketing campaigns. The products are of high quality thus they are charged at a premium price. Apple Company Inc. has the largest market capitalization estimated at $446 billion. Because of its financial strength, the company has 75,800 full time employees globally and it enjoyed an annual revenues of $170 billion in 2013. The company is ranked in the top ten of the Fortune 500 companies. Another ranking by the Inter-brand Best Global Brand have reported that Apple is the most valuable brand in the world with a value of $118.9 billion. Apple’s key partners include social networking sites developers and programmers such as Facebook and LinkedIn. These companies have been essential in partnering with Apple in marketing its products because the company pre-install these applications in their electronic gadgets such as the iPhones. The Taiwan Semiconductor Manufacturing Company (TSMC) has been a confidential key partner for Apple Company since it shares with it important data on the A7 system on chip technology (SoC).
Over an extended period of time, Apple Inc. has appreciated that its growth and development would be equally dependent on the input of its key partners which include AT&T. This company is the closest partner to Apple since it is the sole carrier of iPhones. The partnership deal begun in 2007 it lasted till 2011 when Verizon begun competing it by selling iPhone 4s. Verizon Communications is another major business partner. It is the largest telecommunication carrier in the US and it has participated in the launch of the iPhones. The Verizon provides a CDMA network. The other partner is Foxconn Technology Group which is a leading electronic manufacturer globally. It is also the largest exporter of electronics in China. It is the company that assemblers the hardware for Apple in its plants in Taiwan and China. TPK is another vital partner as it deals in the supply of touch-panels across the world. It is the largest supplier of touch panels for the iPhones and the iPads. It is reported that approximately 75% of TPK’s revenues came from its partnership with Apple. The Quanta Computer Company is another key partner as it manufacturers the MacBook and iMac product lines for Apple. The partnership between the Taiwan based Quanta Computers and Apple dates back to 1998. Quanta is among the leading notebook manufacturers across the world as it supplies brands such as Gateway and Hewlett-Packard.
2. Mission and vision statements of Apple Company
The management at Apple Company have not set out a clear and elaborate mission and vision statement. Nonetheless, the company has shown signs that its mission statement is either dynamic or that it is embedded into the hearts of its employees and the other stakeholders. Accordingly the most suitable mission statement has to entail such rubrics associated with a strong believe that the company is focused on revolutionizing the world by offering quality products through innovation, research and development (Erica, 2012). The management has to show its commitment towards customer satisfaction by providing simple products which are not complex to the end users. Another pertinent statement to be included in the Apple mission statement would be the company’s strong believe that it has to make a contribution towards bettering humanity by carefully selecting its market segments and creating niches. This objective can enable directing resources towards products and market that offer most profits while promoting investing into projects that are meaningful to the stakeholders. For the work teams, the company believes in cross-pollination and deep collaboration that will allow the company to be creative and innovative. The groups and work teams have to be seamlessly integrated so as to help them acquire basic virtues that will propel the company into attaining the company’s vision. The vision of Apple Company can therefore be focused on continuously investing into innovations that will transform human life while making the company a center of excellence and global market leadership in the electronic and IT industries. Both the mission and vision statement will second the Apple Company Inc. slogan which states that an apple a day keeps the doctor away.
3. External Audit
An external audit of Apple Company’s Inc. can be facilitated by the use of a PESTEL analysis. This term is an abbreviation for Political, Economic, Social, Technological, Environmental and Legal factors. It describes a strategic framework which can be used by a company to analyze its macro-environmental factors by scanning the environment. This analysis will be helpful in understanding market growth factors and thus contribute towards formulating a viable research strategic plan.
Political factors determine the degree of government intervention in the growth and development of the economy. The government through its policies and regulations have impacted on decisions made by the management at Apple. For instance, since 2005, the company has expanded its market segments outside the United States thus selling most of its products outside the USA. The countries that account for most of its sales include China, Ireland, Czech Republic and Korea. The global market place is diverse with developing and developed countries. These governments impact on the sales volume of products through taxation, tariffs and quotas so as to achieve a Balance of Payment (BOP) (David, 2007). In the event that Apple disregards these international rules and those set by the US government, then it will have a hard time marketing its products.
Economic factors have impacted on the decision making process at Apple Inc. This is because global factors such as economic growth, inflation rate, exchange rates and interest rates impact how a business operates. Economic situations such as recession and bloom could impact on the sales made on Apple as a company. The products produced by Apple are mostly viewed as luxuries thus an increase inflation could result into low sales volumes. This is because of the increase in unemployment rates which will reduce disposable income thus lowering the buyer’s propensity to purchase. Economic factors can affect Apple either negatively or positively.
Social-cultural factors describe the living patterns and values of the global consumers of Apple electronic products and services. Social factors impact on customer preferences, income groups, and perception and life priorities towards purchasing Apple products. Whereas other social factors such as fashion, social class and peer pressure could drive people into purchasing Apple products, the same forces could make people value other products instead of Apple’s (David, 2007). The company has managed to associate itself with quality, reliability and innovation. The consumers are also aware that Apple Inc. is an expensive brand. Social factors are synonymous with cultural aspects such as population growth rate, age, demographics and distribution of people. These factors collectively impact the company’s positioning of its products and creation of niches.
Technological factors are determined by the ability of Apple to manufacture and design highly innovative and differentiated products through research and development. So far, Apple Inc. has managed to win over more customers because of its unique products. The IT industry is competitive based on the ability for a firm to be innovative in creating appeal through appearance and product features (David, 2007). Legal factors describe the global laws governing the manufacture of electronic products by companies such as Apple Inc. The company has benefited from laws allowing for sub-contracting of countries with cheap labor such as Korea, and China. As a result, the company has managed to create a competitive advantage due to its low costs of production. Environmental factors are determined by the geographic location of a country since it has an impact on the climatic changes and apparently, this forms the bulk of environmental influence on trade and consumption trends. These factors include the climate, weather and geographic location. This factor mostly affects farming and agri-businesses thus it does not influence much of the operations at Apple Company.
4. Internal Assessment
An internal audit for Apple Company entails the use of strategic management and planning tools such as Financial Ratios, IFE, QSPM and SWOT analysis. SWOT analysis is an abbreviation for the Strengths, Weaknesses, Opportunities and Threats. In terms of strengths, Apple Company has for a long time been associated with innovations. The history of the company dates back to a visionary leader; Steve Jobs who had an inert passion for developing new technologies. Steve jobs created this competence by introducing a research and development department which worked hand in hand with the other departments. The specific contributions of these departments include the management information systems department which was vigil in analyzing the IT trends among key rivals such as Samsung and Nokia. The second department was finances and accounts department which coordinated the allocation of resources towards research and development. The marketing department contributed towards innovation by collecting statistics on marketing trends and the consumer wants thus the research and development department used the information in connecting the product design to future customer wants. The production and operations department was upfront in designing new technologies so as to maximize on the returns by reducing cost of resources. The production unit was essential in ensuring that the new technologies adopted matched the political legal requirements set by the government.
As a result, the cutting edge innovations have been seen in the launch of the iPhone, the iPad and other devices. This has made innovation a hallmark for the company which strives to improve its previous models of phones as seen in the recently launched iPhone 6. These innovations include a wider display size, an upgrade of the iOS operating system and other hardware. They have also designed an iWatch which is a novel offering in its product line. The other innovations which will likely improve the company’s sales include the launch of the iPad Air 2, iPad Pro, new MacBook and iPad Mini 3. These innovations form part of the strategic planning process since they have contributed towards competitive advantages and increased sales which has earned Apple Company an increase in their market share (Lorenzen, 2006). The second strength is associated with the finances of the company. As it has been reported by the finance department which helps the other departments in budgeting and resource allocation, the company has had a positive cash-flow since its inception. The company currently has an asset base of $38 billion and an additional $127 billion in long term securities. Because of this financial endowment, the company can decide to use acquisition strategies so as to leverage itself against competitors. An example is the recent decision by the company to purchase Beats Electronics at a cost of $3 billion. With the purchase, the company has widened its capital returns program. Financial capabilities also mean that the company is better placed to advertise and market its products. The marketing strategy is often a collaboration between the finance department together with the sales and marketing department. For instance, during the fiscal 2013, Apple spent $1.1 billion on advertising budgets.
Apple Company has in the past experienced weaknesses such as premium pricing. The company’s products are among the priciest computing devices in the market. The marketing department targets a market niche dominated by luxurious buyers. Because of this marketing strategy, the company has failed to penetrate developing markets where companies such as Tecno and Huawei have dominated because of their low priced telecommunication gadgets. The luxury positioning of the product has also rendered Apple to price competition in developed markets such as South Korea where Samsung and China’s Xiaomi have significantly increased their market share. The second weakness is associated with the iPad product line which in spite of previous successes has lost out on its former market share. The shipment of iPads fell by 9% in the fiscal 2013. This signifies that Apple managed to sell only 13.4 million units in Europe and U.S. Most of the sales were made in the BRIC countries. The iPad has in the recent past suffered stiff competition and the growing number of manufacturers of tablets such as Google’s android powered tablets which retail at a much lower price. It is projected that the sluggishness of the market towards the iPad is likely to persist unless the company does something about its pricing strategies so as to fit into the developing countries and other oversea markets. The other strategic move towards solving this two problems is the need to partner with companies such as IBM. The two companies are reputable thus it would be prudent if their partnered towards developing more superior applications for the iPhones and iPads.
Apple could embrace strategies aimed at increasing its opportunities by growing its market share growth. Given the fact that Apple has been losing its market to Samsung due to intensive rivalry, the marketing department can still work together with the operations department to redesign their marketing strategies so as to increase the market share. Apple holds 20% of the global tablet/PC market share. On an overall scale, it ranks higher than Samsung and Lenovo. According to the projections made by the marketing department, the company is expecting a growth in its market share in 2014 especially after the launch of iPhone 6 and an increase in marketing activities in China and Pacific regions. It is further expected that the penetration of the iPhones into the BRIC geographies will contribute towards creating opportunities for the company. This is because Apple has made contracts with influential wireless carriers in the local target countries thus increasing the customer segments. Its most promising agreements was that with China mobile which is expected to increase the exposure of Apple’s products to the more that 760 million subscribers of the huge network. The second opportunity arises from the purchase of Beats Electronics. By purchasing this Beats, Apple proved that mergers and acquisitions was a strategic option into increasing a company’s competitive advantages. The deal which was completed in August 2014 opens up new opportunities for Apple Company. The acquired company will boost the iTunes product line including the radio services. The same company will also help Apple in developing its iWatch among other wearable audio devices. There is also the opportunity of talent infusion from music industry icons and managers such as Dr. Dre and Jimmy Iovine who have been the creative managers for the Beats Electronics.
Competition has been the biggest threat to Apple Company. Technology is faced passed and because of this the electronics industry as well as the IT industry are very elusive. The product cycle for these industries moves fast from the introduction, growth up to the maturity stages. This rapid growth into maturity and decline phases have intensified competition since the companies that are better positioned at making innovations have in the past used innovations to win over customers from competitors. According to the Porters generic analysis, it is also made evident that the premium pricing makes it hard for Apple to compete in some markets which are dominated by low-cost rivals as it is the case in China, India and most African countries. The second threat results from gross margin pressures stemming from intensive competition. A loss in the pricing power, rising costs of production and product shortages have also impacted on the company especially in the past years where at times demand has exceeded supply leading to shortages. According to the SWOT analysis of Apple Companyi, which presents an interplay between the various departments; operations, marketing, finance, research & development departments, development and management information systems department and their contribution towards the advancement of the internal audit at Apple Company, it is highly likely that the strengths and opportunities presented for the company far much outweigh the weaknesses and the threats. The overall results reflect on the company’s ability to grow its dividends, improve its product quality through more innovations and increase its returns and market share through aggressive marketing.
5. Establish Long Term Objectives
Just like any other company that is guided by a mission and a vision statement, Apple is looking forward to establishing formidable strategies that will see it thought turbulent financial times. The most preferable strategies begin acknowledging the fact that Apple as a company is looking towards introducing new products and services as part of its diversification plan. The introduction of these products and services triggers a thorough analysis of the pricing strategies implemented at the company. Product pricing determines the ability of a product to be accepted by the customers. For instance, the launch of the iWatch by Apple has to conform to the customers’ expectations of the prevailing market prices by competitors such as Samsung Galaxy Gear, Qualcomm Toq and Sony Smart-Watch (Boundless, 2014). The Moto 360 smart watch stands out as the most dominant rival for the iWatch. When considering the pricing for the smart-watches, Apple has to consider cost based pricing which is computed using the formulae;
Cost + Fixed profit percentage = Selling price.
Alternatively, the company could decide on using competition based pricing, value-based pricing, or demand based pricing. Given the intensity of competition in the smart watch market, it is financially feasible for Apple to use the competition based pricing but in the event that the company wants to use value based pricing, then it has to consider such factors as the uniqueness of their products and the product features embedded into their hardware system. The software also has to be reliable and seamlessly inter-operable with other iOS 8 devices on the market. Given the fact that the product is at the introduction product life cycle, then its prices have to be low so as to attract customers after which the prices can be adjusted as the product moves to the growth stage and into maturity. According to marketing analysts, when a company is launching new products, it has to consider the best way to capture the market. In order to attract the customers, Apple will have to implement a pricing structure that is transparent in future so as to compete effectively rather than using the current premium pricing strategies.
The second futuristic objective for Apple Company is tied to its need for continuous growth. The IT industry is at its growth life cycle since it is coupled with extensive research, development and innovations. This means that the long term objectives for Apple Company have to promote growth in what is known as a growth strategy. The growth strategy includes improving on the current products while making plans to introduce new products and services for the diverse market segments. Cell phone and computer manufacturing companies are aware of their continuous need to improve on their technologies and this should be the trend at iPhone. It is highly suggested that unlike the current trend where Apple only develops one or two brands of electronics such as the iPhone 6 and iPhone 6 plus launched in 2014, the company could start manufacturing products for the different market segments. This will ensure that the company keeps abreast with the demands posed by the customers. Apple could also venture into upcoming smartphone and computer/PC markets in Africa and Asia such as India so as to explore the market and identify the products that could perform well in such markets. So far it is acknowledged that Apple has managed to implement the product differentiation strategy and it has been a key factor in creating a blue ocean for its products. This is because of the uniqueness in the products coupled with the innovations in hardware and software. This has made the products unique and superior to its competitors. The accessibility of the company’s services has been facilitated by its multiple chain stores strategically located in 14 overseas countries.
6. Evaluate and select a strategy or strategies
The selected strategy that is mostly used by global organizations is the acquisition strategy. Acquisition is defined as the corporate action of buying another company by a more dominant and established company. The process of acquisition mostly begins with the identification of a target company where the parent firm begins by acquiring partial ownership that will enable it to influence policies and decisions. An increase in stake to a percentage exceeding 50 will give the firm control over the target company. This strategy has been found suitable where a company intends to take over an existing company together with its market niche. It is often beneficial where a company weights the cost of expanding on its own as being a more expensive and uncertain strategy than acquiring an already existing business. There are two types of acquisitions and this can either be hostile or friendly. Friendly takeovers occur when a firm expresses and enters into an agreement making it possible for it to be acquired while a hostile acquisition happens when the acquiring firm forcefully takeover the ownership of a target firm by purchasing more than 50% of its stocks and shares. The process of acquisition is often accompanies by a strategic logic which includes the need to expand operations or the market. This strategy could also be driven by the need to eliminate competition especially in duopolistic industries dominated by two firms. All in all, the strategy is aimed at a general goal of value creation. According to an empirical research by David, (2007 backing this strategy, it is observed that companies could decide to acquire another company so as to achieve the following archetypes. First, the acquiring companies have the intent of improving their performance, second, they could be focused on minimizing competition, third, the acquiring company might want to expand on its market by merging its current customer base with the niches created by the target company and fourth, acquisition has the benefit of helping a company to acquire technologies and skills that could have been more expensive to create.
Examples of multinational companies that have been successful using the acquisition strategy include IBM which pursued the strategy by purchasing software firms. This was between the years 2002 and 2009 where it acquired 70 software companies at a cost of $14 billion. The company had made a previous estimation that the acquisitions would bolster its software products thus increasing its revenues by 50% within the first 2 years and a growth margin of 10% in the following three years. In another example drawn from the consumer goods industry, Procter and Gamble after acquiring Gillette created a stronger company that increased its sales volume by merging markets. Their working together enabled them to expand their market with more ease. Another example is where Cisco Systems acquired a broad line networking company so as to gain technological leverage (Boundless, 2014). The acquisition helped Cisco to access internet equipment after it acquired 71 companies at a cost of $650 million and $150 million in 1993 and 2009 respectively.
7. Implementation Plan
As it has been exhibited in the examples listed in the previous section of this paper, Apple Company also has a chance to embrace acquisition as its main business strategy. So far, Apple has made several acquisitions and mergers. According to a statement by the current CEO, Tim Cook, the company’s main goal of acquiring other companies is for it to own the intellectual property because the company always wants to own its production lines. So far, Apple has acquired the PA Semiconductor Technology Company so as to control its team of employees and technologies since the company has been instrumental in developing proprietary chips for the iPads and the iPhones. Apple also acquired Siri, which is a voice recognition business start-up that also owned mapping technologies. This company has formed a basis for Apple Maps. According to the financial reports for fiscal 2013, Apple has $137 billion in cash while other capital has been preserved in marketable securities (Mckeown, 2012). Over the past years, the implementation of acquisition strategies has been seconded by talent acquisition as well as the purchase of patents and novel technologies. The process of acquiring small firms by Apple has been aimed at easing the process of integrating the new products and services into their product line.
8. Conclusions and Recommendations
In conclusion, it is prudent to consider both the internal and external analysis when making decisions about strategies to be implemented by Apple Company. The analysis made in this report identifies that Apple is currently leveraged this gives it a better position to exploit a larger market coupled with its talented employees and financial resources. As a result, if the company refined its acquisition strategies while matching up with pricing strategies and continuous innovations, then the company will sure reach its optimum productivity. This will be evident in its increased market share, which will considerably boost its revenues and earnings. As a result, it is recommended that Apple Company has to invest in diversifying its products and creating market niches that will compete its such as rival. This is to mean that Apple has to use selective pricing in is market segment so as to win over a larger market share.
Phase 2 Research Strategic Plan Project Preparation Work –
You should now have selected the company for your strategic plan, either, Ford Motor Company, Apple or iRobot. Continue your preliminary research on the company by beginning to analyze the external forces that affect the organization: economic, social, cultural, demographic, environmental, political, governmental, legal, technological and competitive. Use the tools for external audit and benchmarking on the company in your strategic plan. – Due in Week 3
An analysis of Apple Company’s Inc. can be facilitated by the use of a PESTEL analysis. This term is an abbreviation for Political, Economic, Social, Technological, Ethical and Legal factors. It describes a strategic framework which can be used by a company to analyze its macro-environmental factors by scanning the environment. This analysis will be helpful in understanding market growth factors and thus contribute towards formulating a viable research strategic plan.
Political factors determine the degree of government intervention in the growth and development of the economy. The government through its policies and regulations have impacted on decisions made by the management at Apple. For instance, since 2005, the company has expanded its market segments outside the United States thus selling most of its products outside the USA. The countries that account for most of its sales include China, Ireland, Czech Republic and Korea. The global market place is diverse with developing and developed countries. These governments impact on the sales volume of products through taxation, tariffs and quotas so as to achieve a Balance of Payment (BOP) (David, 2007). In the event that Apple disregards these international rules and those set by the US government, then it will have a hard time marketing its products.
Economic factors have impacted on the decision making process at Apple Inc. This is because global factors such as economic growth, inflation rate, exchange rates and interest rates impact how a business operates. Economic situations such as recession and bloom could impact on the sales made on Apple as a company. The products produced by Apple are mostly viewed as luxuries thus an increase inflation could result into low sales volumes. This is because of the increase in unemployment rates which will reduce disposable income thus lowering the buyer’s propensity to purchase. Economic factors can affect Apple either negatively or positively.
Social-cultural factors describe the living patterns and values of the global consumers of Apple electronic products and services. Social factors impact on customer preferences, income groups, and perception and life priorities towards purchasing Apple products. Whereas other social factors such as fashion, social class and peer pressure could drive people into purchasing Apple products, the same forces could make people value other products instead of Apple’s (David, 2007). The company has managed to associate itself with quality, reliability and innovation. The consumers are also aware that Apple Inc. is an expensive brand. Social factors are synonymous with cultural aspects such as population growth rate, age, demographics and distribution of people. These factors collectively impact the company’s positioning of its products and creation of niches.
Technological factors are determined by the ability of Apple to manufacture and design highly innovative and differentiated products through research and development. So far, Apple Inc. has managed to win over more customers because of its unique products. The IT industry is competitive based on the ability for a firm to be innovative in creating appeal through appearance and product features (David, 2007). Ethical factors are related to the ability for the company to ensure that its products are original, safe, secure and not counterfeited. Ethics has helped in protecting innovations made by Apple thus reducing chances of imitation by other companies. Legal factors describe the global laws governing the manufacture of electronic products by companies such as Apple Inc. The company has benefited from laws allowing for sub-contracting of countries with cheap labor such as Korea, and China. As a result, the company has managed to create a competitive advantage due to its low costs of production.
Reference
David, E. H. (2007). Strategic Management: From Theory to Implementation. New York: Routledge.
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Competitive Strategy (Worth a Maximum of 15% of Course marks)
Discuss the major theoretical approaches to the building and sustaining of competitive strategy using the available academic literature including blue ocean strategy and other approaches. This assessment component must be based on minimum of 12 peer-reviewed academic articles. No wiki or general web sites please.
Essay/Report style- can use headings and graphs, tables and diagrams.
SAMPLE ANSWER
Introduction
A firm achieves a competitive advantage when it persistently obtains higher levels of profit than its competitors do. This explains why there are a number of theories in the strategy domain that extensively address competitive advantage in an attempt to explain how management decisions and market factors may be manipulated to result into superior economic performance. To gain competitive advantage, an organization is first expected to create superior value for consumers by pricing their commodities a bit lower than the competitors, or instead develop a unique product or service that the consumers will be willing to purchase at premium price (Daniela 2014: 523). Hence, the firm needs to create a competitive strategy that will enable it to establish a much profitable and highly sustainable position in the industry compared to competitors. This profitability is also greatly influenced by the level of attractiveness of the industry. This paper champions the thesis that competitive advantage can be gained and sustained by the use of various competitive theoretical approaches.
Blue Ocean Strategy
For many years, companies have for long engaged in head-to-head competition while searching for the sustained and profitable growth. Hence, they have struggled for competitive advantage, market shares, and differentiation. Unfortunately, with the current overcrowded industries, such head on competitions will not benefit a company in any way, but instead will lead to a bloody “red ocean” of rivals, all of whom will be fighting for the gradually shrinking pool of profits (Ng, Lau & Ismail 2014: 132). Therefore, there are minimum chances that this approach will eventually lead to profitable growth in future. This is why it has been argued that most of the future leading companies will succeed by avoiding the red oceans, and instead creating blue oceans of uncontested market space with a great promise for growth (W. Chan & Mauborgne 2005: 105). These strategic moves, also known as value innovation, create powerful improvements in value for both the firm and its consumers, thus, the rivals are rendered obsolete and this unleashes new demand.
In this strategy, the red oceans signify the various industries existing today, while the blue oceans signify the nonexistent industries, also known as the unknown market space. Hence, where in red ocean companies try to outperform their rivals by grabbing the greatest market share of the existing demand, in blue oceans companies are focusing on creating new market space, demand, and thus an opportunity for highly profitable growth (Čirjevskis, Homenko & Lačinova 2011: 201). Despite the fact that some of the blue oceans are created beyond the already present industry boundaries, a greater number are developed from within the red oceans simply by expanding these existing boundaries (W. Chan & Mauborgne 2005: 106). In blue oceans, there is simply no competition since the rules are yet to be set. The market space has vast potential that has not been explored.
Red oceans will always be an important part of the business life. However, with the supply exceeding customer demand in most industries, competition for the greatest share will no longer be sufficient enough for companies to achieve and sustain superior performance. As a result, companies need to look beyond this competition in the established industries by seizing new opportunities for growth and profits by creating blue oceans as well.
Figure 1: The Profit and Growth Consequences of Creating Blue Oceans
According to research conducted by W. Chan and Mauborgne (2005: 107) on 108 companies, they noted that 86% of the launches were line extensions while another 14% were aimed at creating new market spaces. Although these line extensions in the red oceans delivered 62% of the total revenues, they only led to 39% of the total profits (W. Chan & Mauborgne 2005: 107). Contrary to this, the 14% that were aimed at creating blue oceans resulted in 38% total revenues and a startling high amount of 61% in total profits. As is noted in figure 1, the performance benefits of creating blue oceans are clearly seen, and they outnumber the benefits of red oceans.
There are quite a number of forces that drive the rising imperative to develop Blue Oceans. Increased technological advances have substantially contributed to the improvement of industrial productivity, which have allowed suppliers to produce a wide range of products and services. Globalization is also another factor as it has led to the dismantling of trade barriers between nations. This has also contributed to information on products and services being available globally (Singh 2012: 20). While supply is on the rise due to the rise in competition, there is no evidence to proof the rise in demand as well. As such, there is an increase in commoditization of products and services, intensified price wars, and also the shrinking profit margins. “For major product and service categories, brands are generally becoming more similar, and as they are becoming more similar people increasingly select basing on price” (Qtd from W. Chan & Mauborgne 2005, p.108).
Resource Based View Strategy
A different conceptual foundation which features more on the internal firm capabilities and less on the industry structure argues that a firm’s position to achieve and sustain competitive advantage is directly linked to the firm specific resources (Laosirihongthong, Prajogo & Adebanjo 2014: 1232). This resource based theory of the firm puts great emphasis on the role of developing unique and valued know-how as well as capabilities that will be close to impossible for rivals to imitate (Madhok, Li& Priem 2010: 94). This is usually difficult and it requires the firm to select effective strategies basing on the development of resources and capabilities. The presence of multiple resources and capabilities positively contribute to the development of the highest competitive entry barriers (Hinterhuber 2013: 797).
Figure 2: Resources and Capabilities Based View of the Firm
For a firm to develop a true cost or differentiation advantage, the firm’s resources and capabilities must be valuable, rare, imperfectly imitable, and non substitutable (Newbert 2008: 745). “If a resource or capability yields the potential to enable a firm to reduce costs and/or respond to environmental opportunities and threats, it is valuable, and to the extent that a firm is able to effectively deploy such a resource or capability, it will attain a competitive advantage.” (Qtd. From Newbert 2008, p. 747 ). Judging from this statement, it is clear that the level of competitive advantage achieved by a firm will basically rely on the value of its resources and capabilities. Hence, when the resources and capabilities are of marginal value, the firm will only attain minimal competitive advantages compared to firms with greater resource and capabilities values. This theory creates an assumption that the firm is well placed to exploit its resources and capabilities. This is because competitive advantage can only be achieved once the potentially valuable resources and capabilities are deployed effectively (Costa, Cool & Dierickx 2013: 449). Hence, resources and capabilities must be deployed together so as to attain competitive advantage. To further support this, Madhok, Li and Priem (2010: 99) state that firms are also required to process raw materials to make them more useful. For this to be effective, the resources must be put in use in a group of other resources to form effective combination. This is why Costa, Cool and Dierickx (2013: 449) contend that organizations may develop rents not only through the choice of better resources than that of competitors, but also by exploiting these resources more effectively with the use of proper capabilities. “no matter how great a firm’s capabilities might be, they do not generate economic profit if the firm fails to acquire the resources whose productivity would be enhanced by its capabilities” (Qtd. From Newbert 2008, p. 748).
Competitive advantage is usually obtained when the firm achieves a cost level, exploits untapped market opportunities, and neutralizes threats that competitors would otherwise fail to accomplish (Varey 1995: 45). This, however, may be impossible to achieve if the resources and capabilities are present widely. Consequently, competitive advantage will be more likely achieved only when the exploited resources and capabilities are rare or only possessed by few firms in a small industry where perfect competition will be impossible (Srivastava, Fahey & Christensen 2001: 777). Since resources and capabilities are supposed to be explored in a combination, it means that the rareness will not be at the individual resources and capabilities, but instead at the level of resource-capability combinations (Newbert 2008: 750). For instance, if a particular combination of resources and capabilities is common, a greater number of firms will be able to imitate the resulting strategy, hence reducing a firm’s competitive advantage. Therefore, the individual resources and capabilities need not be rare for the firm to achieve competitive advantage, but the combination is what must be rare.
Porter’s Generic Strategies
The approaches involved in this strategy are referred to as generic strategies mainly because they can be applied to products and services of all industries, and to organizations with varying sizes. Porter named the three approaches “cost leadership”, “differentiation” and “focus”. The focus strategy is then further divided into two parts; the cost focus and the differentiation focus (See figure 3).
Important questions for the economy are how firms compete and which strategies they choose. An improved understanding of a firm’s competitiveness is also important in that it contributes to the improvement of existing policies relating to competition and other relevant issues (‘Achieving the Superiority’ 2010: 152). This improvement will, hence, provide valuable support to the efforts meant to continuously develop markets and businesses. This understanding is also important when it comes to comparing the domestic and internal contexts by being placed to effectively assess a firm’s competitive behavior. “If firms pursue any of the three recommended generic competitive strategies they will be able to outperform competitors who do not pursue such strategies.” (Qtd. From Ormanidhi & Stringa 2008, p. 56).
From a firm’s point of view, a relevant and most important aspect of competitive environment should be the industry in which it operates in. This is where the competition takes place (Allen, Helms, Takeda & White 2007: 72). According to Porter’s analysis, these industries contain firms that create and develop close substitutes, but the competitive environment of the firm’s feature a common structure with the five competitive forces. These forces are what will determine the overall level of competitiveness and profitability of the industry (Gurǎu 2007: 369). These include; threat of new entry, intensity of the level of rivalry among the already existing firms, pressure from the presence of substitute products, bargaining power of consumers, and the bargaining power of suppliers (Gonzalez-Benito & Suárez-González 2010: 1030). Profitability- the turn on invested capital- is related negatively to the overall strength of these five forces. Therefore, the greater the joint strength of the five forces affecting industries, the lower the industry profitability (Miller & Friesen 1986: 39).
Porter’s generic strategies help a firm to analyze the industry in which it functions in, in terms of the five competitive forces, so as to note its strengths and weaknesses in relation to the actual state of competition. This is possible because if the firm realizes the effects of each of these five forces, it will be better placed to take actions so as to defend itself or grasp an opportunity to enable it to be better placed so that these forces do not affect it (Gonzalez-Benito & Suárez-González 2010: 1032). Differentiation and low cost are the two forms of strategic or competitive advantage that firms can use to position themselves effectively against the pressures of the five forces. When these strategies are applied, firms will be better placed in the industry, and this will give them an opportunity for achieving higher profitability than their competitors. To achieve competitive advantage, these strategies cannot be pursued all at the same time. Instead, they must all be considered individually.
The cost leadership strategy is mainly focused on bringing in sales and taking them away from competitors. This happens by increasing profits by lowering prices, and ensuring that the average industry price is charged for products. This is important as it brings in sales since consumers will not understand why they have to pay higher prices in other companies for a similar product. The differentiation strategy, on the other hand, ensures that products are differentiated and made more attractive than those of consumers. This is enhanced by the presence of effective research, development and innovation among many others. Lastly, the focus strategy ensures that a company focuses on a particular niche in the market. This is made effective when the firm takes the effort of understanding the market dynamics and unique needs of customers.
Bowman’s Strategy Clock
Figure 4: Bowman’s Strategy Clock
Bowman’s strategy clock is based on an argument that key variables, when it comes to positioning, include price and perceived quality both of which are major determinants of value (Varey 1995: 47). To achieve these, Bowman makes an assumption that five potentially successful routes can be followed, while three others will lead to straight failure.
Position 1: Low price/Low Value
When the products of a company are only differentiated minimally, the company will most definitely be in this position whereby the sales are only made on price alone. The firms in this position never choose to compete here, as it features the bargaining region. Therefore, consumers have an opportunity of bargaining the prices into an amount they feel is suitable for the products they want to purchase. This is usually because consumers cannot find any differentiated value, thus they know that they possess the power to manipulate prices as a result of many competitors. Firms in this position can improve their chances of gaining and sustaining competitive advantage by cost effectively selling volume and also developing new ways of attracting more customers (Laosirihongthong, Prajogo & Adebanjo 2014: 1240). It may be impossible to achieve customer loyalty; however, one way of being ahead of other competitors in this position is by always being one step ahead by selling more products than they do. Therefore, there is hope since the products may be of low quality, but judging from the prices, customers will feel more comfortable purchasing from these companies.
Position 2: Low Price
This position can be compared to Porter’s generic strategies: low cost leader position. The companies available in this position usually struggle to lower costs and also achieve high volume to counteract the negative effects of low margins (Ormanidhi & Stringa 2008: 60). Over time, such a company using this strategy will turn out to be most powerful in the market as it will have increased its market share. This is one way of gaining and sustaining competitive advantage over other companies. In case a company’s strategy to be low cost leader fails, the result may be catastrophic to all companies in the industry but beneficial for consumers. This is because there may develop a price war situation whereby each company is trying to take control by altering prices.
Position 3: Hybrid (Moderate price/moderate differentiation)
This approach is a combination of the low cost approach, however it also emphasizes on product differentiation so as to offer consumers better value for their money. These companies also focus on volume; however, their main agenda is to build their reputation by offering good prices for equally good products. This approach enables a company to build and maintain competitive advantage as there is an assurance that the products will be of high quality, despite the fact that prices are fairly low (Costa, Cool & Dierickx 2013: 456). Hence, this company will be better placed to have more loyal consumers as items are of good quality and prices are affordable compared to what is presented to them in other companies.
Position 4: Differentiation
This is also another approach that is quite similar to Porter’s view of differentiation. It is basically emphasizing on offering differentiation so consumers would prefer certain products to others from another company. Therefore, when the high perceived value is offered, the company can either choose to increase price when there is higher margins, or keep prices lower so as to increase market share (Hinterhuber 2013: 800). This is where branding is very important, as the company’s product will always be related to higher quality than others. This strategy must be applied with care; otherwise, the company will fail as a result of running low on resources. Competitive advantage in this case will rather be achieved when there are higher profit margins, or an increased market share. This is because; the production of higher value products will need extra resources. Companies use the extra income to keep up with the change in value. Therefore, in the event that these new sources of income fail to yield results, the company will not be able to keep up. The higher the value of products compared to that of other companies, the better the competitive advantage.
Position 5: Focused Differentiation
This strategy is usually characterized by the presentation of a higher perceived value at a rather substantial premium price. The consumers who purchase in this category are basically focused on the product’s perceived value only. This means that price is not a factor for these consumers, as they have a certain kind of product value they are in search of. Companies that offer designer products are more likely to be found in this position. Bowman states that the products do not necessarily have to be of much higher value as the consumers are basically relying on their perceived value of the products. Therefore, if consumers feel like a certain brand offers high value products; they will purchase it without considering if the products indeed have more value than others. The competitive advantage for such a company will be gained and sustained by focusing on target markets and high margins (Daniela 2014: 529). This means that the company will focus on producing goods that its target market will most likely purchase. This increases the odds of having many consumers purchase expensive products. This in turn will result into high profit margins that the company will enjoy and use to sustain its position by further developing more valuable products and selling at premium prices.
Position 6: Increased price/Standard Product
This strategy features a sudden increase in price without an equal increase in product quality. It is, however, basically a gamble as the high price may either result into positive or negative impacts on the firm. There are times when the price increase in accepted by consumers, this is probably where the previous price was very low for the products. Hence, consumers will not mind topping up the amount. However, if the product is of poor quality, and this strategy is sought, the consumers may decline the change and thus lose loyalty in the company. This, in turn, results into loss of market share that will also affect the competitive advantage of the company (Singh 2012: 26). Another disadvantage of this strategy is that it may only be applied for short term use, maybe to boost market share, but must soon be discontinued. This is because in a competitive industry, another company will soon imitate this strategy and set another premium price, thus affecting this company’s profitability.
Position 7: High Price/ Low Value
This strategy only applies in a monopoly market, whereby goods and services are only offered by a single company. There are no competitions, which is why the company can charge whatever amount it prefers since there is no risk of losing market share. If this is the only company with the goods and services, consumers will have to pay for the products whether they agree to the pricing or not. This knowledge is what gives the company an advantage to make the most of the situation as such markets never last. Soon there will be new entries, and competition will be triggered. Therefore, companies will be forced to once again focus on the value of products and the prices they offer as well.
Position 8: Low value/ Standard Price
Generally, a low product value leads to a low product price so as to attract consumers to purchase the product. Therefore, this last strategy is the worst that companies may choose to use as they may appear greedy and selfish. With this approach, failure is predicted easily. Consumers will obviously prefer to pay a standard price for better valued products, or instead a low price for low valued products.
In a competitive industry, the last three strategies will most definitely lead to failure as customers will move in search of better product offers in other companies. This positioning approach is usually not static as competitor positions will most definitely change in response to new entries, or changes in strategies as a result of market or internal company conditions.
Structure Conduct Performance Approach
Over many years, this approach has offered guidance for many scholars who wished to further develop approaches for competitive strategy (Madhok, Li & Priem 2010: 94). This approach features three major elements: first, the structure of industries that are mainly defined by concentration, market share distribution and many other characteristics; Second, the conduct of firms that usually involves their action in relation to price setting, advertisement expenditures, technology and many others; Third, the performance of firms and industries as identified by profitability measurements. These elements of structure, conduct and performance are usually bound by three main casual relationships: The effects of structure on firm conduct, the effects of structure on firm performance, and the effects of firm conduct on its performance. The most important relationship, in this case, is the one between structure of industries and firm’s performance. When it comes to considering performance, an assumption is made that the market power is positively related to profitability. Therefore, the higher the market power, the higher the profitability will also be, and vice versa. “The manufacturing industry over 1936-1940 found support for the hypothesis that profitability of firms in highly concentrated industries is larger than in less concentrated ones” (Qtd. From ‘Achieving the Superiority’ 2010, p. 160).
Various researches have been conducted on the different approaches for competitive strategy, and the SCP model always gives differing results commonly depending on heterogeneity degrees (Afuah 2013: 259). However, this finding can be more refined when the relationship between concentration and performance assumed by the SCP model would stand in homogeneous and not heterogeneous industries. Although structure was initially considered to be exogenous in this model, the most important issues relating to it can all be summed up under barriers to entry. According to Daniela (2014: 526), the factors that can be interpreted as barriers to entry include, economies of scale, differentiation advantages that products have, and the advantages of absolute cost. Therefore, although there is an assumption made on structure, it does not mean that it is an irrelevant component. Therefore, all these components must be used equally in an evaluation expected to result in competitive strategy. This is why this model has always been criticized. It is clear that the conduct of a firm and its profitability will most definitely influence market structure.
This model, therefore, can be used by firms to gain and sustain competitive advantage in that firms will know how to influence the three factors so as to result with good results on the other. Since competitive strategy is all about getting power over the other companies, by offering goods or services that they cannot easily imitate, this company may choose to adopt a conduct that will enable it to change its structure and eventually lead to improved performance. The price setting conduct can be used to gain competitive advantage in that when the best prices are offered, consumers will be attracted in high numbers (Gonzalez-Benito & Suárez-González 2010: 1039). The product must also be considered so as to ensure the consumers will not result into a great loss for the company by purchasing goods at throw away prices. Therefore, the company may decide to calculate the costs of manufacturing the product, and then sell it at minimal profits to avoid crisis. This sudden increase in consumers for the company is just part of gaining competitive advantage, and must therefore be improved for the company to sustain its competitive advantage. The sustenance can be achieved once the company is sure the consumer loyalty has been gained, and not just their one time appearance once the price has been lowered. This is because its profit margin and increased market share will be improving every day, and not rising high for a couple of weeks before dropping tremendously.
The relationships described in this model will play a major role in guiding the formation of a competitive strategy. For example, it is stated that the structure related to the performance of the firm. Therefore, when the structure of the industry is concentrated, it means that the company should be experiencing better performance. This is due to the fact that there is an opportunity for obtaining increased market share and profit margins. This information will hence be used in determine the conduct of the firm to achieve competitiveness. A concentrated market structure means that there are more consumers than companies can cater for. Therefore, a firm may decide to lower prices for a couple of months so as to increase market share. This unique opportunity will be attractive for consumers, who will henceforth shop in this company. After some time, the company may opt to increase both price and product value. This is a strategy to ensure that customers are not lost in the process of increasing profit margins. With this, the company will have gained competitive advantage, and will be better placed to act as the price setter in its industry since it will possess the largest market share.
Conclusion
In light of the discussion presented above, it is clear that there are various strategies that can enable a company to achieve and sustain competitive advantage. The five discussed in this paper are the major and most commonly used strategies. All of these strategies are focused on placing the company at a better industry position, providing customers with value at fair prices, and offering unique products to satisfy the unmet needs of consumers. They, however, achieve these through different approaches. The Blue Oceans strategy focuses on the creation of a new market space; the resource based view focuses on developing rare products that will limit competition through the possibility of substitution; and Porter’s generic strategies focuses on forces within the industry that can affect competitive advantage. Bowman’s Strategic Clock is a strategy that focuses on different directions that companies may take to achieve and maintain competitive advantage in different market situations. The SCP model, on the other hand works on relationships, and how one action may be manipulated to result to competitive advantage for the firm as a whole.
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Lack of Identification of Employer Goals on Organizational Strategy
In every organization, goals and objectives have to be set either by the employer, or jointly through a collaborative process involving the employer and the employees. Either way, organizational goals provide important blueprints that determine the course of action of employees and employers, and aids in designing and preparing for future changes (Ovidiu-Iliuta, 2014). Owing to the crucial nature of these goals and objectives, it become imperative that every employer has to ensure that SMART goals and objectives are instituted, to guide the operations of the organization, and bring order. However, what would happen if these goals were not set? It is on this backdrop that this paper develops a solid argument behind the impact of lack of identification of employer goals on organizational strategy.
As aforementioned, organizational goals provide a blueprint that define the course of action of an organization. Basically, this course of action is what is referred to as strategy. An organizational strategy refers to a contingent of activities and plans outlined to pursue a given objective, and to take care of the future. Drawing from this definition, it is clear that employer goals and organizational strategy go hand in hand, and must be used in tandem to ensure organizational success. According Farndale, Pai, Sparrow, and Scullion (2014), organizational goals serve four major roles: they facilitate planning, provide direction and guidance, assist in employee motivation, and contribute in performance evaluation and control.
Lack of identification of goals would hamper adequate planning in an organization. Since the business world is a rapidly changing platform, it is imperative that organizations come up with plans for the future, for instance, how to compete fairly, how to keep up with the ever-changing consumer preferences, and how to cope up with technological advancements, among others (Ovidiu-Iliuta, 2014). Without the institution of proper plans, it would mean that the organization would be caught off-guard when such crucial changes occur.
Additionally, as earlier identified, goals are important motivators for employees. Working with a known target makes operations easier, achievable, and motivating. However, in a case where the targets are not well designated, employees would not work hard enough, since they are not driven by any pressure to achieve. In line with this, employers also usually tend to align organizational goals with their own, and use these as their performance indicators (Ovidiu-Iliuta, 2014). It is important to appraise highly performing employees, since this would impact heavily on their motivation to work and be retained within the organization. Performance appraisal is only possible if there are set goals that act as indicators of good work.
As line managers, overcoming pitfalls caused by lack of identification of goals calls for solid leadership abilities. Most importantly, line managers need to be collaborative, and involve employees in goal-setting, so that they feel part of the organization. One contingent approach would be to set specific short-term goals for teams, and ensure that these goals are met at the end of the specified time (Effects of wellbeing strategies not measured, report finds, 2013). While these might act as ephemeral solutions to the above pitfalls, it is important that the line managers come together to set long-term goals for the entire organization, based on its culture and objectives. This process should be collaborative, and must involve all employees so that they embrace the goals, and become part of the organization. Still, fostering teamwork in such a scenario is a great way to get the goals to be met satisfactorily.
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